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JAMA Forum: Outcome of 2012 Election Will Likely Affect Medicaid Far More Than Medicare
By Aaron Carroll, MD, MS
The last month or so, the Presidential campaign has often felt like a war over Medicare.
Republicans have claimed that the Democrats have robbed the trust fund to pay for an entitlement for other people. They claim that the Affordable Care Act (ACA) has cut Medicare by more than $700 billion in the next decade. They also claim that these reductions will mean reduced benefits for seniors as well as decreased reimbursement for clinicians.
Democrats, on the other hand, claim that the Republicans want to end Medicare as we know it. They claim that Gov Romney’s proposal will turn the current defined benefit program into “vouchercare,” leading to seniors’ struggling to pay bills. They claim that the prior proposals of the Republicans’ vice presidential nominee, Rep Paul Ryan (R, Wis), will force the elderly to pay an exorbitant amount for their health care in the future. They also claim that delaying any changes for 10 years will bankrupt Medicare by 2016.
Given these arguments, you’d think that the differences between the 2 parties were about as large as you could imagine. The truth of the matter, however, is that there is much more light here than heat. The President’s latest budget holds the growth of Medicare spending to gross domestic product (GDP) plus 0.5%. Ironically, that’s the same exact number that Rep Ryan used in his budget. The difference between the 2 plans is only in the way those cuts are made. The Democrats want to depend on changes aimed at clinicians, like accountable care organizations and the Independent Payment Advisory Board. Republicans want to focus on consumer-level changes like premium support (a subsidy toward a health insurance plan) and competitive shopping. But if health care stays below GDP plus 0.5%, then neither really matters.
These differences in Medicare are real, and they are worthy of discussion. But they are nothing when compared with the differences in Medicaid.
Until President Clinton spoke last week, there was almost no focus at all on Medicaid. That’s a pity, because the future of the program will be remarkably different depending on who wins the election.
Medicaid covers more people than Medicare does. In 2009, more than 61 million people were beneficiaries, compared with 45 million people receiving Medicare. Yet we spend far more on Medicare, $511 billion in 2009, compared to $318 billion for Medicaid. Given this, you’d think there might be more cuts proposed from Medicare than from Medicaid. You’d be wrong.
Rep Ryan’s 2013 budget, which Gov Romney says he supports, stipulates that Medicare spending in 2022 would increase to $855 billion. Note that this is barely less than would be spent without cuts, because most of the proposed changes will not have gone into effect by then. On the other hand, in 2022, combined spending for Medicaid and the Children’s Health Insurance Program (CHIP) will be $322 billion, which is almost less than we spend on Medicaid right now.
It gets even more parsimonious for Medicaid after that. Rep Ryan’s budget expects that Medicare spending would go from 3.25% of GDP in 2011 to 4.25% of GDP in 2030 and 4.75% of GDP in 2050. Again, this is a cut, because the Congressional Budget Office estimates that Medicare would otherwise account for 7% of GDP in 2050 under current policy. Medicaid and CHIP, on the other hand, will go from 2% of GDP today to 1.25% in 2030 and 1% in 2050. Medicare growth is slowed; Medicaid actually shrinks.
Such cuts have consequences. Many of them may affect the same elderly people who have been promised that they won’t be affected by the Republicans’ Medicare proposals. After all, about 6 million seniors are “dual-eligibles,” or people who qualify for Medicaid and Medicare. About 25% of the Medicaid money spent on these people goes toward Medicare premiums and cost-sharing. Seniors depend on it. About 40% of all the money spent on dual-eligibles is spent on long-term-care facilities. About $15 000 is spent on each dual-eligible each year. Cut Medicaid, and those benefits will almost certainly be cut.
The number of people covered by Medicaid will be drastically cut as well. By 2021, the Republican plan would likely necessitate that 19 million people will need to be dropped from the Medicaid rolls. Things would only get worse from there.
It’s important to remember that although the focus is often on “block granting,” the savings projected to come from Medicaid in the Republican proposal are a result only of this drastically reduced spending. There’s no “innovation” driving them. They will have real consequences, and they’re not hard to predict.
No matter which party wins in November, 10 years from now, Medicare will look roughly as it does today. The same cannot be said of Medicaid. It’s time we talked about that.
About the author: Aaron E. Carroll, MD, MS, is a health services researcher and the Vice Chair for Health Policy and Outcomes Research in the Department of Pediatrics at Indiana University School of Medicine. He blogs about health policy at The Incidental Economistand tweets at @aaronecarroll.
About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMAhas assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMAForum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.